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Monday, March 30, 2009

Anti-muni broadband bill is back

Posted by on Mon, Mar 30, 2009 at 4:47 PM

The “Anti-Competition Act” is back.

Two years ago, state legislators rejected a bill that would have effectively made it impossible for cities, towns and counties to build their own high-speed Internet, cable TV or phone services. Now a new version of the bill has emerged.

Last week, N.C. Sen. David Hoyle (D-Gaston) introduced SB1004 to “level the playing field” of telecommunications by saddling local governments with extra costs and strict financial requirements if they seek to compete with private companies.

Industry advocates say it’s unfair that governments can borrow money more cheaply, through bonds, than private companies can. So the bill would require local governments to tack on to the fees they charge consumers the difference in the amount it would cost a private company to borrow start-up funds.

Also, a city could not use government funds to “cross-subsidize” the launch or operation of a system—a practice common in private industry.

The bill appears to aim directly at the City of Salisbury, which is building its own $30-million municipally owned fiber-optic Internet, TV and phone system.

The City of Wilson launched a similar system last summer. As Salisbury’s system will do, Wilson’s Greenlight competes with the cable and DSL offerings of private companies in the area. But the city-owned, fiber-based service offers significantly higher speeds at comparable prices (see "Mighty, mighty broadband," June 18, 2008).

“This is an attempt to protect monopolies at the expense of local communities,” says Wilson spokesperson Brian Bowman. “The 2007 bill that would have crippled Wilson was a bad bill and so is this one.”

In 2007, phone and cable companies pushed hard for "The Local Government Fair Competition Act,” but an alliance of cities, public interest groups and private companies –- including Google –- successfully opposed it.

Among the opponents was Catharine Rice of Action Audits, which advises and advocates for local governments on communications issues. She says the bill is geared to prevent competition. “The industry wants to burden communities who want to build their own networks to underserved areas by loading them up with costs so that the rates are so high, nobody will buy the service.”

Stakes are higher this time around, Rice says, because the bill could prevent North Carolina communities from being eligible for broadband stimulus money.

“The [National Telecommunications and Information Administration] has set aside $4.7 billion to bring broadband to underserved and un-served communities, making states and localities directly eligible,” Rice says. But the agency has said it will only fund financially sustainable projects, and saddling governments with extra costs renders their services unsustainable, Rice says. If the state legislator passes this bill, “the rest of the country would get to apply for federal broadband grant money, but not North Carolina.”

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